The Federal authorities have lawfully charged the suspected mastermind behind the ICO scheme and third Centra founder, Ray Trapani, with fraud.
Following the charge, other co-founders at Centra, Robert Farkas, and Sam Sharma were also charged as well as arrested on 1st April over fraud allegations related to the initial coin offering of the startup. Centra claimed to build cryptocurrencies debit card and raised around $32 million in terms of September ICO.
As per the SEC, the three co-founders exchanged text messages with regards to cooking up fake documents and accusing freelancers of misleading all the marketing materials. Thus, the alleged mastermind is now facing civil and federal criminal charges.
It is not yet clear why Trapani, was not actually involved in the original complaint, even though his association with the startup was documented by the Business insider back in November, but as per the SEC, it was about the text messages between three co-founders which explicitly clarified their fraudulent intentions.
Considering the conversation between founders, SEC alleged that co-founders at Centra went to great lengths in order to establish a false impression as if they have developed a cutting-edge, viable technology – stated by the chief of the SEC Enforcement Division’s cyber unit – Robert A. Cohen.
He further stated that investors have to exercise caution regarding investments in such digital assets. This is particularly true when these digital assets are marketed with various claims that seem way too good to be true.
Centra was under investigation by SEC since February
The SEC first informed Sharma that company was under investigation. As per the civil complaint – the bank accounts of Centra were depleted and the majority of their employees had already been terminated.
According to the complaint, the co-conspirator Farkas tried to flee and made a flight reservation on 1st April to leave the US but he was reportedly arrested before even boarding his flight.
Impressive biographies of fictional executives
Centra successfully sold around $32 million in terms of CTR Tokens to various investors during September. Centra claimed to create a debit card for cryptocurrency by MasterCard and Visa that can be used just like credit cards at various stores. However, the SEC alleged that Visa or MasterCard had no association with Centra. The SEC further alleged that Farkas and Sharma established impressive biographies of fictional executives to promote and sell ICO to investors.
Moreover, the Centra posted numerous misleading and false marketing materials on its official website and paid many renowned celebrities to ‘flaunt the ICO on social media platforms’
Since the announcement of Centra’s product in August 2017, it brought on board different celebrity endorsers including musician DJ Khaled and boxer Floyd Mayweather to tout its fundraising effort. In response to the charges, the Centra Tech lawyer shared a statement;
‘Centra Tech is fully aware of the placed allegations and chooses not to comment at this moment. Mr. Farkas and Mr. Sharma are being represented by personal counsel who is handling the company matters’
Nevertheless, investment in the virtual currency is legal but deceiving investors is not. It’s time to see if Centra will set a good or bad example on the crypto platform.